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Canada’s Participation in the Wideband Global Satellite Communications System

Backgrounder / January 17, 2012 / Project number: BG–12.003

Recent Canadian Forces (CF) efforts in Libya and Afghanistan have underscored the critical importance of the exchange of information between headquarters, formations and units. Satellite Communications (SATCOM) is used to transmit voice and data between CF members in the field and back to strategic decision-makers, and is crucial to the success of modern military operations.

To fulfill this strategic requirement moving forward, Canada has agreed to join with its military friends and allies, in the Wideband Global SATCOM (WGS) System. This international partnership is an investment in developing a global satellite communications system. By signing the WGS Memorandum of Understanding, Canada joins allies such as Australia, Denmark, Luxembourg, the Netherlands, New Zealand, and the United States.

In exchange for a contribution of $337.3 million, the CF will obtain approximately 20 years of access to reserved frequencies for military communications systems in theatres of operation across the globe. This cost is approximately $140 million less than what was approved by the Order in Council in October 2011.

Canada’s contribution to the WGS system is known internally as the Mercury Global project.

Capability Requirements

At the present time, the CF purchases communications bandwidth on an as-required basis from commercial satellites. While this has been sufficient to date, future requirements and emerging cyber-security concerns have highlighted the need to improve secure communications by moving to an exclusively government network rather than a platform shared with commercial clients.

The WGS system will provide partner nations with service in both the X and Ka-band frequencies, which are reserved for government communications. The information transmitted by the CF over this system will be secured from potential threats or attacks by way of sophisticated information management techniques, and will be segregated from the data of other partner nations. Three of the originally planned eight satellites have already been launched and are in operation, the fourth will be launched the week of January 16th, 2012, and the fifth is scheduled for launch later in 2012. The signing of the MOU will provide funding for the construction of a ninth satellite, further enhancing the constellation’s coverage.

Cost Efficiency

The CF currently spends approximately $25 million per year on its SATCOM requirements, which are achieved through the as-required lease of commercial satellite bandwidth. The cost to maintain this status quo is expected to increase significantly over the next 20 years. While examining its options for future SATCOM requirements, the Department of National Defence and the CF considered two other alternatives: the first was to continue leasing bandwidth as needed, and the second was to pursue long-term commercial leases in accordance with ongoing and anticipated operational requirements. Based on this analysis, it was determined that pursuing an allied partnership was by far the most operationally effective - and cost-effective option.

Ground Infrastructure

The Canadian Forces are defining these requirements in anticipation of a future competitive tendering process for this portion of the project. The requirements related to ground infrastructure are still being ascertained

Canada’s Industrial and Regional Benefits (IRB) Policy

The IRB Policy applies to Canada’s participation in the WGS system. Boeing, the builder of the satellites, will be subject to an IRB obligation requiring it to place high-value business activities with Canadian industry valued at 100 percent of Boeing's share of Canada's contribution to the WGS system.

As Boeing was a third party to the MOU between Canada and the United States Government, a separate IRB agreement was negotiated between Canada and Boeing. Boeing’s $240 million IRB obligation for the Mercury Global project carries all of the same terms and conditions and penalty clauses as a traditional IRB arrangement.

Boeing is also required to provide 20 percent of its obligation in direct and/or global value chain business activities. For this project, this means that 20 percent of the obligation must be related to the WGS satellite or work involving Canada’s space sector. Boeing has also committed to completing 10 percent of its obligation with Canadian small and medium-sized businesses.